As a past accounting professor would always say, "Figures don't lie, but liars do figure." This couldn't be truer when it comes to predicting personal training revenues. For years, I have always been surprised at how many annual budgets were created and revenues were projected for personal training, but none had any metrics to support their target predictions, other than months or years in operation.Traditional budgeting thought process was based on assumptions/perception and not reality. The assumption was the longer in business and more members acquired or compounded, the more your personal training revenue should grow each month and year. Typically,such pro-forma predictions are straight-line increases of three to five percent of the previous year's performance, failing to account for type of member base, client acquisition rates or personal trainer closing ratio, client training frequency and life cycle of a paying client.

Understanding Client Behavior

Utilizing empirical research, which tracks the client acquisition rates of personal trainers, it was indicated that the majority of new clients were from new members during their first 30 days of membership. Basically, after an initial orientation or "testing the waters" period of 30 days, members fall into auto-pilot, utilizing the same programs, services and amenities available in a facility. Lacking the ability to recognize this significant window of opportunity and not having a systemized process to strategically integrate members into a facility's programs negatively impacts the retention of these members, while also minimizing any chance to significantly increase personal training revenue or any other ancillary sales such as mind/body services, juice bar, pro shop, supplements, etc.

Further investigation of this tracking revealed a common denominator among the types of members who will increase the likelihood of purchasing facility-offered services, programs and products during the critical first 30 days.Having this knowledge was important in that, not only does it enable you to better budget your personal training revenue to support your operations, but also helps strategize how to train your staff to capitalize on these profitable new members.

Basically, there are three types of members who join a fitness facility based on activity status: first-time exerciser, previous exerciser and current exerciser. Cross-referencing the closing ratios with the categories previously mentioned showed a significant affinity of new clients from the first-time exerciser group, while only a small percentage was receptive to personal training from the previous exerciser group and just a fraction of a percent could be accounted to the personal training revenue potential from the current exerciser group, from a budgeting perspective. Having each new member classified into one of these three categories clearly demonstrates that all members are not created equal when it comes to increasing the personal trainer new client acquisition rates.

Budget Preparation

1. Have membership sales classified into the following categories:

Category A:First-time exerciser

Category B:Previous exerciser

Category C:Current exerciser

2. Know what percentage from each category will actually meet with a fitness professional/personal trainer for assistance toward a goal.

3. Know your targeted new-membership sales for the month. For personal training studios that do not have any residual membership due base, targeted prospects for the month can be used in place of new members.

4. Know your average closing percentage, as either a department or individual for getting a new client after a consultation.

With these four steps, you can predict your potential revenue. For illustration purposes, from new member sales alone, Table 1 shows how knowing these budget steps, you could predict what your facility should be able to generate per month. Depending on the average life cycle of your paying clients, this targeted revenue is compounded for every four weeks of this cycle.

Extracting Useful Information

Utilizing these steps to prepare your budget will result in a more accurate method to explain any variance in your targeted revenue. When you either exceed or fall short of a target revenue goal, it is important to know why the variance occurred. This knowledge of the variance is how you can drive your personal training revenue as well as other ancillary revenues to their true maximum potential.

If you are exceeding your goals, you want to identify the reasons and duplicate them. For instance, through tracking, you notice you are selling more category "A" members due to some community outreach program; thus, this gives you feedback and validates that you continue those efforts. For example you offer an incentive dollar for dollar credit on initiation fees toward personal training services during the first 30 days only after a completed consultation. This incentive rather than the typical three, free personal training sessions is increasing the percentage of members who actually meet with a personal trainer to discuss a fitness strategy. If this or other incentives are increasing the number of prospects your staff has to sell to and your closing rate is high, that would warrant continuing with that incentive or making it a standard practice. The same holds true for when you are falling short of target revenues. Gathering and utilizing statistics to track the percentage of clients meeting with a fitness professional, closing percentages and client training frequency will provide a "needs assessment" profile of your staff and where you may need to provide help to ensure they are capitalizing on every opportunity.For instance:

If you see only a small percentage of category "A" prospects are actually meeting with a fitness professional, you may need to look at how the services are being presented at "point-of-sale" or double check your initial profiling process to ensure that you are correctly categorizing each prospect/member.

A good benchmark for a closing percentage is seven out of every 10 clients a trainer

initially sits down with for a consultation should turn into a paying client. If your

staff isn't reaching that benchmark in their closing percentages, that is a definite sign

for the improvement and training in the

area of sales, more particularly value presentation skills.

If average client training frequency is less than three, preferably four times per week, that is another sign for improvement. The best recommendation to increase average training frequency to four times per week is via exercise prescription/results-only training, utilizing the Dollarization principle.

Measuring Success

Extracting the previously mentioned factors for increasing your membership revenue and the use of Excel software, you can create a very effective "personal trainer budget calculator," which makes planning and evaluating your business time-effective and more accurate than traditional methods. With the calculator, all you need to enter in the spreadsheet are the following variables:

With this data entered, you can prepare monthly and annual budgets with targeted gross and net revenues only factoring payroll and cost/benefits as well as predicted payroll expenses and profit margin. Tools, such as this, are not designed to only show the work you have to do, but it is a tool to give your business/department a gauge and "steering wheel" to capitalize and improve from any variance that your business presents.

How do you define what is successful, in dollars, for your personal training business, department or individual staff?How do you know if "golden opportunity" clients are sliding through the cracks in your system? How much is each client worth to your business each month? How would your bottom line be impacted if you could find one, two, three or even 10 additional "golden opportunity" clients each month from an effective metric tracking system? Remember, in most cases, you only get one chance to make a first impression; therefore, make sure you have a system to position yourself to maximize those chances.

Mark J. Rullo, MS, CSCS, MES has over 17 years of club management and industry consulting experience with facilities ranging from personal studios to large chains and Medical Fitness Centers. Presently, Mark is a Business Solution Consultant and Territory Manager for Star Trac Fitness Products. Mark can be reached by phone at 724.972.8060 or you can email him at markrullo@comcast.net.